Passing off

Case Note: Gloag & Son Ltd and Another v Welsh Distillers Ltd and Another

Jane Lambert
June1997

This case note originally appeared on the Lancaster Buildings website

This was an application by the defendants to strike out the plaintiffs' statement of claim.
Facts
The plaintiffs were well known Scotch whisky distillers whose products included "The Famous Grouse" and "Chivas Regal". The defendants marketed whisky made in Scotland as "Swn y Mor Welsh Whisky". Each bottle was labelled with a map of Wales and the words:

"From the Principality of Wales, SWN Y MOR is a subtle blend of whisky, herbs and Welsh heritage. Iechyd Da."
The Scotch whisky distillers sued the Welsh for passing off and infringement of the provisions of Council Regulation (EEC) No. 1576/89 which governs the definition, description and presentation of spirit drinks throughout the European Union.

Claim in Passing off
The plaintiffs claimed that the Regulation gave them a private right of action for the purpose of enforcing that regime. The defendants denied that the plaintiffs has a reasonable cause of action under either head. Relying on Bristol Conservatories v Conservatories Custom Built Ltd. [1989] RPC 455, Samuelson v Producers Distributing Co. Ltd. (1931) 48 RPC 580, Plomein Fuel Economiser Coy. Ltd. v National School of Salesmanship (1943) 60 RPC 209 and John Henderson v A. Munro (1905) 7 F. 636, the plaintiffs contended that the sale of a beverage that had acquired its character and definitive qualities from recipes and production methods used to make Scotch, where nothing had been done in Wales to contribute to such character and qualities, as "Welsh whisky," was a misrepresentation made by a trader in the course of trade to ultimate consumers that was likely to take away the business, and dilute the goodwill, of the Scotch producers. Instead of distilling their own spirit in Wales they were riding on the back of a Scottish product.

Geographical Indications
Secondly, the plaintiffs argued that they had a right of action to enforce the Council Regulation and submitted that the defendants' use of the expression "Welsh whisky" breached the Regulation in that it was a false geographical designation that misled consumers. The defendants replied that none of the above contentions gave the Scotch producers a cause of action. They had obtained their whisky not from the plaintiffs but from another supplier who had made no complaint about the final resale. The Regulation was intended to safeguard the interests of consumers and not producers and therefore cold not be enforced by them. The plaintiffs referred the judge to the recitals of the Regulation which mentioned the desirability of conferring exclusive rights "on the producers" and the decisions of the Vice-Chancellor in The Scotch Whisky Association v JD Vintnersand (unreported) 6 March, 1996) and of Rattee J. in The Scotch Whisky Association v Glen Kella [1997] ETMR 470.suggesting that the Regulation did confer rights of action on producers.

Judgment
The judge dismissed the application. Despite the differences with Bristol Conservatories where the defendant had falsely represented that the plaintiff’s goods were his, the defendants had used a product of predictable and renowned quality to build up the reputation of their goods and falsely described that product as Welsh. The Scotch producers may have suffered, or may suffer, damage as a result of this misrepresentation in that the defendants will achieve a reputation for quality that truly belongs to Scotch and then will be able to use it to promote the sales of any spirit which they choose to sell under the name "Welsh whisky" thereby diluting the reputation of Scotch. Laddie J recognized that it is not enough for a plaintiff to show only that a defendant has improved his competitive position vis-à-vis the plaintiff by deceiving the public. Scotch producers would have had no cause of action had the defendants bottled the best Irish whiskey and called it Welsh whisky. Nor could they sue someone who bought Scotch whisky and falsely called it "Buckingham Palace whisky" or "Selfridges whisky". It was difficult to say how far the Bristol Conservatories principle extends, but that would be an issue in the action. As for whether there was a right of action under the Regulation, the judge considered that he was bound by the J D Vintners and Glen Kella decisions to conclude that there was. There may well be limits to who can exercise such right but it would not be appropriate to resolve that issue on a strike out application. Accordingly, the application failed.

Comment
Laddie J's decision in Welsh Whisky is difficult to reconcile with Chocosuisse Union des Frabricants Suisses de Chocolat v Cadbury Plc [1998] RPC 117, which he tried a few weeks earlier. In Chocosuisse he distinguished between "classic passing-off" and the "extended form of passing-off" first recognized and applied in Bollinger v Costa Brava Wine Co. Ltd. [1960] RPC 16 where protection is given to a name or word which has come to mean a particular product rather than a product from a particular trader. Two important differences between the "classic" and "extended" forms of the actions were that:
"In the new extended form of the action, no proprietor currently using the name in relation to his goods can prevent any new competitor of his making or selling goods to which the name can accurately be applied and from using the name for that purpose. The current users of the descriptive word can only use their shared interest to prevent others from using it on products for which it is not a proper description or designation. Furthermore it is not open to any existing user of the protected name to use it on products for which it is not an accurate description or designation. Messrs Taittinger are no more entitled to use the word "Champagne" on a non-alcoholic cola drink than anyone else."
He concluded correctly that those entitled to use a word share a common interest in protecting its purity as a designation applied to a particular type of goods but in no real sense does it belong to an individual trader to do with as he likes. A proprietary interest in the appellation seems to be precisely what the Scotch producers will have to show at trial in order to succeed in their action on what perhaps now ought to be called extended inverse passing-off - if, indeed, such a tort exists.

Important